DSW 2012 Annual Report Download - page 50

F- 10
1. BUSINESS OPERATIONS
Business Operations- DSW and its wholly owned subsidiaries are herein referred to collectively as DSW or the “Company”.
DSW’s Class A Common Shares are listed on the New York Stock Exchange under the ticker symbol “DSW”. DSW Class B
Common Shares are not listed on a stock exchange but are exchangeable for Class A Common Shares at the election of the
shareholder.
DSW has two reportable segments: the DSW segment, which includes the DSW stores and dsw.com sales channels, and the
Affiliated Business Group segment (previously known as the leased business division segment). DSW offers a wide assortment
of brand name dress, casual and athletic footwear and accessories for women and men. As of February 2, 2013, DSW operated
a total of 364 stores located in 41 states, the District of Columbia and Puerto Rico. During fiscal 2012, 2011 and 2010, DSW
opened 39, 17 and 9 new DSW stores, respectively, and closed 1, 2 and 4 DSW stores, respectively.
DSW separates its merchandise into four primary categories: women's footwear; men's footwear; athletic footwear; and
accessories and other. The following table sets forth the approximate percentage of DSW segment sales attributable to each
merchandise category for the periods presented:
Fiscal years ended
Category February 2, 2013 January 28, 2012 January 29, 2011
Women’s 65% 66% 66%
Men's 16% 15% 15%
Athletic 12% 12% 13%
Accessories and Other 7% 7% 6%
DSW also operates shoe departments for three retailers through its Affiliated Business Group segment. As of February 2, 2013,
DSW supplied merchandise to 260 Stein Mart stores, 83 Gordmans stores and one Frugal Fannie’s store. During fiscal 2012,
2011 and 2010, DSW added 19, 20 and 6 new shoe departments, respectively, and ceased operations in 11, 36 and 9 shoe
departments, respectively. The increase in shoe department closures in fiscal 2011 was due to the bankruptcy and subsequent
closure of Filene's Basement and Syms stores in December 2011. DSW owns the merchandise and the fixtures, records sales of
merchandise, net of returns through period end and excluding sales tax, and provides management oversight. The retailers
provide the sales associates and retail space. DSW pays a percentage of net sales as rent, which is included in cost of sales as
occupancy expense. Affiliated Business Group segment sales represented 5.9%, 7.5% and 7.8% of total net sales for fiscal
2012, 2011 and 2010, respectively.
2. SIGNIFICANT ACCOUNTING POLICIES
Fiscal Year- The Company’s fiscal year ends on the Saturday nearest January 31. The periods presented in these financial
statements are the fiscal years ended February 2, 2013 ("fiscal 2012"), January 28, 2012 ("fiscal 2011") and January 29, 2011
("fiscal 2010"). Fiscal 2012 consisted of 53 weeks while fiscal 2011 and 2010 each consisted of 52 weeks. Unless otherwise
stated, references to years in this report relate to fiscal years rather than calendar years.
Use of Estimates- The preparation of financial statements in conformity with accounting principles generally accepted in the
United States of America requires management to make estimates and assumptions that affect the reported amounts of assets
and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and reported amounts of
revenues and expenses during the reporting period. Significant estimates are required as a part of inventory valuation,
depreciation, amortization, customer loyalty program reserve, recoverability of long-lived assets and intangible assets, litigation
reserves, exit and disposal obligations and establishing reserves for self-insurance. Although these estimates are based on
management’s knowledge of current events and actions it may undertake in the future, actual results could differ from these
estimates.
Principles of Consolidation- The consolidated financial statements include the accounts of DSW and its wholly owned
subsidiaries. All intercompany accounts and transactions have been eliminated in consolidation.
Sales and Revenue Recognition- Revenues from merchandise sales are recognized upon customer receipt of merchandise, are
net of returns through period end, exclude sales tax and are not recognized until collectibility is reasonably assured. For sales
through the dsw.com sales channel, DSW defers revenue representing a time lag for shipments to be received by the customer.
Table of Contents DSW INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS